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Exam 1: Introduction to Accounting and Business

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Question 1

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All of the following are general-purpose financial statements except

A) balance sheet
B) income statement
C) retained earnings statement
D) cash budget

E) A) and C)
F) C) and D)

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Question 2

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Trendsetter Travel Services began business on January 1, 2011. Balances at December 31, 2011, are listed below. Prepare an income statement, retained earnings statement, and a balance sheet for Trendsetter Travel Services.

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11ea9299_7e20_02c3_85c7_052e2ea0b450_TB6235_00 11ea9299_7e20_02c4_85c7_255202ff7fc6_TB6235_00 11ea9299_7e20_29d5_85c7_7fd908002d70_TB6235_00

Question 3

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Companies like Enron, WorldCom, and Tyco International, Ltd. have been caught in the midst of ethical lapses that led to fines, firings, and criminal and/or civil prosecution. List and briefly describe three factors that are responsible for what went wrong in these companies.

Name and describe the four primary financial statements for a corporation.

An account receivable is a claim against a customer arising from a sale on account.

List the five steps in the process by which accounting provides information to users.

Two common areas of accounting that respectively provide information to internal and external users are

Proper ethical conduct implies that you only consider what's in your best interest.

An entity that is organized according to state or federal statutes and in which ownership is divided into shares of stock is a

Denzel Jones is the major stockholder of Crystal Cleaning Company, a small corporation. Recently, Denzel received $18,000 of dividends from Crystal Cleaning. After receiving the dividends, he contributed $14,000, in his name, to Habitat for Humanity. The contribution of the $14,000 should be recorded on the accounting records of which of the following entities?

Shiny Kar Company had the following transactions. For each transaction, show the effect on the accounting equation by putting the amount and direction (plus, minus, or NC for no change) in each box of the table below.

The total assets and the total liabilities of a business at the beginning and at the end of the year appear below. During the year, the company paid $60,000 in cash dividends and issued an additional $45,000 of capital stock. Calculate the net income for the year.

If total assets decreased by $88,000 during a period of time and stockholders' equity increased by $65,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is

Flagger Company began operations on January 1, 2011. The accountant prepared the following list of account balances from the company's records for the first year ended December 31, 2011: Prepare an income statement for Flagger Company in good form.

Which of the following is not a certification for accountants?

The unit of measurement concept requires that economic data be recorded in a common unit of measurement.

Purchasing supplies on account increases liabilities and decreases equity.

Determine the missing amount "X" for each of the following:

Ramierez Company received its first electric bill in the amount of $60 which will be paid next month. How will this transaction affect the accounting equation?

Clifford Moore purchased $15,000 of Star Tech stock for cash. Star Tech would